Jun 13, 2013

Goldman Sachs Eyes Japan Offshore Wind in Clean Energy Expansion

June 13 (Bloomberg) — Goldman Sachs Group Inc., the New
York-based bank planning as much as 300 billion yen ($3.19
billion) in renewable energy investments in Japan, is eyeing
offshore wind power after building up holdings in more
established clean energy sources such as solar.

Japan Renewable Energy Co. was set up by Goldman in August
after Japan began offering above-market rates to producers of
clean energy. The incentives, or feed-in tariffs, have spurred
investments in renewables, setting Japan on course this year to
become one of the world’s largest solar markets by annual
installations.

The company sees offshore wind as promising, Shigeru Yasu,
a representative director at Japan Renewable Energy, said in an
interview in Tokyo yesterday. Geothermal and biomass power also
hold potential, he said.

“It takes three to four years to do an environmental
impact study for an onshore wind project with more than 10
megawatts of capacity,” Yasu said. “Projects with larger
capacity are more attractive because an environmental study
requires the same amount of time even for a 500-megawatt
offshore farm.”

Five-Year Investment

Japan Renewable Energy plans in the next five years to
invest as much as 50 billion yen directly into clean energy
projects with capital provided by GS Infrastructure Partners. It
will take as much as 250 billion yen of loans for project
financing, Takahisa Nakagawa, also a representative director at
Japan Renewable Energy, said in the interview. The investments
and loans will amount to about 1,000 megawatts of clean energy,
he said.

Wind power is more challenging than solar for a developer
because it requires prior investment such as an environmental
impact study, Nakagawa said, adding that his company has the
advantage of having people with expertise in wind power.

Offshore wind typically requires approval from local
fishermen before projects can move ahead and costs more for
installation and maintenance than onshore wind.

Japan Renewable Energy is considering more than 300
megawatts worth of solar projects, Nakagawa said. The company
will use panels by LS Industrial Systems Co., a South Korean
electric and industrial equipment maker, at least for its first
four plants.

Panel Supplier

LSIS was picked because it offers quality products for less
compared with Japanese makers and because panels aren’t the only
product the company produces, the officials said.

“There are big pureplay solar panel companies that went
bankrupt and that’s worrisome,” Yasu said. “Even though a
company offers 20 years of warranty, it’s no good if the company
won’t be around 20 years later.”

Japan is set to overtake Germany as the world’s largest
solar market, Bloomberg New Energy Finance said last month.

Developers may install 6.9 gigawatts to 9.4 gigawatts of
solar in Japan in 2013, the London-based research agency said.
Germany led solar installations in 2012 with 7.6 gigawatts of
capacity. Cumulative global solar energy installations reached
102 gigawatts for the first time in 2012, according to
preliminary BNEF data.

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